Transcript No Slide Title

1
Bodie • Kane • Marcus
Essentials of Investments
Fourth
Edition
Chapter 2
Financial Markets and Instruments
Irwin / McGraw-Hill
© 2001 The McGraw-Hill Companies, Inc. All rights reserved.
2
Bodie • Kane • Marcus
Essentials of Investments
Fourth
Edition
Major Classes of Financial Assets or
Securities
• Debt
– Money market instruments
– Bonds
• Common stock
• Preferred stock
• Derivative securities
Irwin / McGraw-Hill
© 2001 The McGraw-Hill Companies, Inc. All rights reserved.
3
Bodie • Kane • Marcus
Essentials of Investments
Fourth
Edition
Capital Market - Equity
• Common stock
• Preferred stock
Irwin / McGraw-Hill
© 2001 The McGraw-Hill Companies, Inc. All rights reserved.
4
Bodie • Kane • Marcus
Essentials of Investments
Fourth
Edition
Stock Indexes
Uses
Factors in constructing or using an Index
Irwin / McGraw-Hill
© 2001 The McGraw-Hill Companies, Inc. All rights reserved.
5
Bodie • Kane • Marcus
Essentials of Investments
Fourth
Edition
Examples of Indexes - Domestic
• Dow Jones Industrial Average (30
Stocks)
• Standard & Poor’s 500 Composite
• NASDAQ Composite
• NYSE Composite
• Wilshire 5000
Irwin / McGraw-Hill
© 2001 The McGraw-Hill Companies, Inc. All rights reserved.
6
Bodie • Kane • Marcus
Essentials of Investments
Fourth
Edition
Examples of Indexes - Int’l
•
•
•
•
Nikkei 225 & Nikkei 300
FTSE (Financial Times of London)
Dax
Region and Country Indexes
– EAFE
– Far East
– United Kingdom
Irwin / McGraw-Hill
© 2001 The McGraw-Hill Companies, Inc. All rights reserved.
7
Bodie • Kane • Marcus
Essentials of Investments
Fourth
Edition
Construction of Indexes
• How are stocks weighted?
Irwin / McGraw-Hill
© 2001 The McGraw-Hill Companies, Inc. All rights reserved.
8
Bodie • Kane • Marcus
Essentials of Investments
Fourth
Edition
Derivatives Securities
Options
• Basic Positions
– Call (Buy)
– Put (Sell)
• Terms
– Exercise Price
– Expiration Date
– Assets
Irwin / McGraw-Hill
Futures
• Basic Positions
– Long (Buy)
– Short (Sell)
• Terms
– Delivery Date
– Assets
© 2001 The McGraw-Hill Companies, Inc. All rights reserved.